Inflation piles pressure on retail cement price

06 October 2004

Kenyan Cement producers are under renewed pressure to increase retail prices as the cost of inputs continue to rise. Market leader, Bamburi Cement, yesterday indicated that although it had no immediate plan to raise prices, the industry is getting concerned about the continued rise in the cost of producing cement. Mr Didier Tresarrieu, the company’s managing director, said the price of coal has risen by between 56 per cent and 85 per cent in the past nine months. In addition to the rise in the price of coal, he said, the cost of ferrying the commodity from source markets such as South Africa had gone up by 70 per cent. The situation, Tresarrieu said, had been worsened by rising cost of electricity and fuel in the domestic market.

Bamburi effected an upward factory price adjustments mid last month and was immediately followed by East African Portland Cement and Athi River Mining (Kenya) Limited. Tresarrieu, who was speaking during the signing of a collective bargain agreement with Kenya Chemical and Allied Workers Union, said Bamburi was aggressively pursuing ways of cutting down on wastage in order to avoid another price increment. By reducing wastage, he said, the firm, would be able to operate profitably without having to pass every cost to the consumer.

However Tresarrieu said the firm agreed to the increase in worker wages against a backdrop of a difficult operating environment and rising inflation because it recognised the importance of human resources in performance improvement. He disclosed that the employees would also be allowed to participate in an innovative performance-based incentive scheme that will reward performance based on defined indicators. "Our employees are the driving force behind our performance, and hence excitement at firming up this long-outstanding agreement that will set forth the terms of employment for unionisable employees regarding wages, allowances and performance incentives," Tresarrieu added.